Which Statement Regarding the Yield Curve Is True

question 70

Multiple Choice

Which statement regarding the yield curve is true?

• A)If inflation is expected to increase in the future, and if the maturity risk premium (MRP) is greater than zero, then the yield curve will have an upward slope.
• B)If the maturity risk premium (MRP) is greater than zero, then the yield curve must have an upward slope.
• C)If the maturity risk premium (MRP) equals zero, the yield curve must be flat.
• D)The yield curve can never be downward sloping.

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Definitions:

Buying Power

The capacity of an individual or group to purchase goods or services, often influenced by income and economic conditions.

Personal Happiness

A state of well-being and contentment that comes from personal achievements, relationships, or other personal attributes.

Relative Deprivation

A perceived disadvantage occurring when individuals think they are worse off compared to others in some respect.

Subjective Well-being

The self-perceived happiness or satisfaction with life. Used along with measures of objective well-being to evaluate people's quality of life.